The earliest recorded organization ofsecurities trading in New York amongbrokers directly dealing with each other can be traced to theButtonwood Agreement. Previously, securities exchange had been intermediated byauctioneers, who also conducted more mundane auctions ofcommodities such as wheat and tobacco.[11] On May 17, 1792, twenty-four brokers signed the Buttonwood Agreement, which set a floor commission rate charged to clients and bound the signers to give preference to the other signers in securities sales. The earliest securities traded were mostly governmental securities such asWar Bonds from the Revolutionary War andFirst Bank of the United States stock,[11] althoughBank of New York stock was a non-governmental security traded in the early days.[12] TheBank of North America, along with the First Bank of the United States and the Bank of New York, were the first shares traded on the New York Stock Exchange.[13]
In 1817, the stockbrokers of New York, operating under theButtonwood Agreement, instituted new reforms and reorganized. After sending a delegation toPhiladelphia to observe the organization of their board of brokers, restrictions on manipulative trading were adopted, as well as formal organs of governance.[11] After re-forming as the New York Stock and Exchange Board, the broker organization began renting out space exclusively for securities trading, which previously had been taking place at theTontine Coffee House. Several locations were used between 1817 and 1865, when the present location was adopted.[11]
The invention of theelectrical telegraph consolidated markets and New York's market rose to dominance over Philadelphia after weathering some market panics better than other alternatives.[11] TheOpen Board of Stock Brokers was established in 1864 as a competitor to the NYSE. With 354 members, the Open Board of Stock Brokers rivaled the NYSE in membership (which had 533) "because it used a more modern, continuous trading system superior to the NYSE's twice-daily call sessions". The Open Board of Stock Brokers merged with the NYSE in 1869. Robert Wright ofBloomberg writes that the merger increased the NYSE's members as well as trading volume, as "several dozen regional exchanges were also competing with the NYSE for customers. Buyers, sellers and dealers all wanted to complete transactions as quickly and cheaply as technologically possible and that meant finding the markets with the most trading, or the greatest liquidity in today's parlance. Minimizing competition was essential to keep a large number of orders flowing, and the merger helped the NYSE maintain its reputation for providing superior liquidity."[14] TheCivil War greatly stimulated speculative securities trading in New York. By 1869, membership had to be capped, and has been sporadically increased since. The latter half of the nineteenth century saw rapid growth in securities trading.[15]
Securities trade in the latter nineteenth and early twentieth centuries was prone to panics and crashes. Government regulation of securities trading was eventually seen as necessary, with arguably the most dramatic changes occurring in the 1930s after amajor stock market crash occurred near the beginning of theGreat Depression. The NYSE has also imposed additional rules in response to shareholder protection controls, e.g. in 2012, the NYSE imposed rules restricting brokers from voting uninstructed shares.[16]: 2
On April 21, 2005, the NYSE announced its plans to merge withArchipelago in a deal intended to reorganize the NYSE as a publicly traded company. NYSE's governing board voted to merge with rival Archipelago on December 6, 2005, and became a for-profit, public company. It began trading under the name NYSE Group on March 8, 2006. On April 4, 2007, the NYSE Group completed its merger with Euronext, the European combined stock market, thus formingNYSE Euronext, the first transatlantic stock exchange.
Wall Street is the leading U.S. money center for international financial activities and the foremost U.S. location for the conduct of wholesale financial services. "It comprises a matrix of wholesale financial sectors, financial markets, financial institutions, and financial industry firms" (Robert, 2002). The principal sectors are securities industry, commercial banking, asset management, and insurance.
Prior to the acquisition of NYSE Euronext by the ICE in 2013, Marsh Carter was the Chairman of the NYSE and the CEO wasDuncan Niederauer. Currently,[when?] the chairman is Jeffrey Sprecher.[18] In 2016, NYSE owner Intercontinental Exchange Inc. earned $419 million in listings-related revenues.[19]
From its opening until August 2000, all stock prices on the New York Stock Exchange were quoted infractional increments of eighths, based on the 17th century Spanish trading system's practice of usingpieces of eight. On August 28, 2000, some stocks were quoted in decimals, and all NYSE stocks weredecimalized by the end of 2001.[20]
The exchange was closed shortly after the beginning of World War I (July 31, 1914), but it partially re-opened on November 28 of that year in order to help the war effort by tradingbonds,[21] and completely reopened for stock trading on December 12, 1914.
On September 16, 1920, theWall Street bombing occurred outside the building, killing forty people and injuring hundreds more.[22][23][24]
TheBlack Thursday crash of the Exchange on October 24, 1929, and the sell-off panic which started onBlack Tuesday, October 29, are often blamed for precipitating theGreat Depression. In an effort to restore investor confidence, the Exchange unveiled a fifteen-point program aimed to upgrade protection for the investing public on October 31, 1938.
On October 1, 1934, the exchange was registered as a national securities exchange with theU.S. Securities and Exchange Commission, with a president and a thirty-three-member board. On February 18, 1971, the non-profit corporation was formed, and the number of board members was reduced to twenty-five.
NYSEtraders' floor before the introduction of electronic readouts and computer screens, 1963
One ofAbbie Hoffman's well-known publicity stunts took place in 1967, when he led members of theYippie movement to the Exchange's gallery. The provocateurs hurled fistfuls of dollars toward the trading floor below. Some traders booed, and some laughed and waved. Three months later the stock exchange enclosed the gallery with bulletproof glass.[25] Hoffman wrote a decade later, "We didn't call the press; at that time we really had no notion of anything called a media event."[26]
On October 19, 1987, theDow Jones Industrial Average (DJIA) dropped 508 points, a 22.6% loss in a single day, the second-biggest one-day drop the exchange had experienced.Black Monday was followed by Terrible Tuesday, a day in which the Exchange's systems did not perform well and some people had difficulty completing their trades.[27]
Subsequently, there was another major drop for the Dow on October 13, 1989—theMini-Crash of 1989. The crash was apparently caused by a reaction to a news story of a $6.75 billion leveraged buyout deal for UAL Corporation, the parent company ofUnited Airlines, which broke down. When the UAL deal fell through, it helped trigger the collapse of thejunk bond market causing the Dow to fall 190.58 points, or 6.91 percent.
Similarly, there was a panic in the financial world during the year of 1997; theAsian Financial Crisis. Like the fall of many foreign markets, the Dow suffered a 7.18% drop in value (554.26 points) on October 27, 1997, in what later became known as the1997 Mini-Crash but from which the DJIA recovered quickly. This was the first time that the "circuit breaker" rule had operated.
On January 26, 2000, an altercation during filming of the music video forRage Against the Machine's "Sleep Now in the Fire", directed byMichael Moore, caused the doors of the exchange to be closed and the band to be escorted from the site by security[28] after the members attempted to gain entry into the exchange.
In theaftermath of the September 11 attacks, the NYSE was closed for four trading sessions, resuming on Monday, September 17, one of the rare times the NYSE was closed for more than one session and only the third time since March 1933. On the first day, the NYSE suffered a 7.1% drop in value (684 points); after a week, it dropped by 14% (1,370 points). An estimated $1.4 trillion was lost within five days of trading.[29] The NYSE was only 5 blocks fromGround Zero. The same day it was announced that the exchange and the New York Stock Exchange building would be closed to the general public, a practice that continues to the present day.[30]
On May 6, 2010, the Dow Jones Industrial Average posted its largest intraday percentage drop since the crash on October 19, 1987, with a 998-point loss later being called the2010 Flash Crash (as the drop occurred for only 36 minutes before rebounding). The SEC and CFTC published a report on the event, although it did not come to a conclusion as to the cause. The regulators found no evidence that the fall was caused by erroneous ("fat finger") orders.[31]
On October 29, 2012, the stock exchange was shut down for two days due toHurricane Sandy.[32] The last time the stock exchange was closed due to weather for a full two days was on March 12 and 13, 1888.[33]
On May 1, 2014, the stock exchange was fined $4.5 million by the Securities and Exchange Commission to settle charges that it had violated market rules.[34]
On August 14, 2014,Berkshire Hathaway's A Class shares, the highest priced shares on the NYSE, hit $200,000 a share for the first time.[35]
On July 8, 2015, technical issues affected the stock exchange, halting trading at 11:32 am ET. The NYSE reassured stock traders that the outage was "not a result of a cyber breach", and theDepartment of Homeland Security confirmed that there was "no sign of malicious activity".[36] Trading eventually resumed at 3:10 pm ET the same day.
On May 25, 2018,Stacey Cunningham, the NYSE's chief operating officer, became the Big Board's 67th president, succeeding Thomas Farley.[37] She is the first female leader in the exchange's 226-year history.
In March 2020, the NYSE announced plans to temporarily move to all-electronic trading on March 23, 2020, due to theCOVID-19 pandemic.[38] Along with thePHLX and theBSE, the NYSE reopened on May 26, 2020.[39]
The New York Stock Exchange (sometimes referred to as "The Big Board")[46] provides a means for buyers and sellers totradeshares ofstock in companies registered for public trading. The NYSE is open for trading Monday through Friday from 9:30 am – 4:00 pmET, with the exception of holidays declared by the Exchange in advance.[a] Proposals for round-the-clock trading have been considered by NYSE.[48]
The NYSE trades in a continuous auction format, where traders can execute stock transactions on behalf of investors. They will gather around the appropriate post where a specialist broker, who is employed by a NYSE member firm (that is, they are not an employee of the New York Stock Exchange), acts as an auctioneer in anopen outcry auction market environment to bring buyers and sellers together and to manage the actual auction. They do on occasion (approximately 10% of the time) facilitate the trades by committing their own capital and as a matter of course disseminate information to the crowd that helps to bring buyers and sellers together. The auction process moved toward automation in 1995 through the use of wireless handheld computers (HHC). The system enabled traders to receive and execute orders electronically via wireless transmission. On September 25, 1995, NYSE member Michael Einersen, who designed and developed this system, executed 1000 shares of IBM through this HHC, ending a 203-year process of paper transactions and ushering in an era of automated trading.
The trading floor of the New York Stock Exchange in March 2022
As of January 24, 2007, all NYSE stocks can be traded via its electronichybrid market (except for a small group of very high-priced stocks). Customers can now send orders for immediate electronic execution, or route orders to the floor for trade in the auction market. In the first three months of 2007, in excess of 82% of all order volume was delivered to the floor electronically.[49] NYSE works with US regulators such as theSEC andCFTC to coordinate risk management measures in the electronic trading environment through the implementation of mechanisms like circuit breakers and liquidity replenishment points.[50]
Following theBlack Monday market crash in 1987, NYSE imposedtrading curbs to reduce market volatility and massive panic sell-offs. Following the 2011 rule change, at the start of each trading day, the NYSE sets three circuit breaker levels at levels of 7% (Level 1), 13% (Level 2), and 20% (Level 3) of the average closing price of theS&P 500 for the preceding trading day. Level 1 and Level 2 declines result in a 15-minute trading halt unless they occur after 3:25 pm, when no trading halts apply. A Level 3 decline results in trading being suspended for the remainder of the day.[51] (The biggest one-day decline in the S&P 500 since 1987 was the 11.98% drop onMarch 16, 2020.)
Until 2005, the right to directly trade shares on the exchange was conferred upon owners of a limited number of "seats". The term comes from the fact that up until the 1870s NYSE members sat in chairs to trade. In 1868, the number of seats was fixed at 533, and this number was increased several times over the years. In 1953, the number of seats was set permanently at 1,366.
These seats were a sought-after commodity as they conferred the ability to directly trade stock on the NYSE, and seat holders were commonly referred to as members of the NYSE. Seat prices varied widely over the years, generally falling during recessions and rising during economic expansions. In January 1927 the cost of a seat reached a then-record $185,000.[52] The most expensive inflation-adjusted seat was sold in 1929 for $625,000, which, today, would be over six million dollars. In recent times, seats have sold for as high as $4 million in the late 1990s and as low as $1 million in 2001. In 2005, seat prices shot up to $3.25 million as the exchange entered into an agreement to merge with Archipelago and became a for-profit, publicly traded company. Seat owners received $500,000 in cash per seat and 77,000 shares of the newly formed corporation. The NYSE now sells one-year licenses to trade directly on the exchange. Licenses forfloor trading are available for $40,000 and a license for bond trading is available for as little as $1,000 as of 2010.[53] Neither are resellable, but may be transferable during a change of ownership of a corporation holding a trading license.
The Barnes family is the only known lineage to have five generations of NYSE members: Winthrop H. Barnes (admitted 1894), Richard W.P. Barnes (admitted 1926), Richard S. Barnes (admitted 1951), Robert H. Barnes (admitted 1972), and Derek J. Barnes (admitted 2003)[citation needed].
In the mid-1960s, theNYSE CompositeIndex (NYSE: NYA) was created, with a base value of 50 points equal to the 1965 yearly close.[54] This was done to reflect the value of all stocks trading at the exchange, in contrast with the then predominantDow Jones Industrial Average which tracks just 30 stocks. To raise the profile of the composite index, in 2003, the NYSE set its new base value of 5,000 points equal to the 2002 yearly close. Its close at the end of 2013 was 10,400.32.
In 1792, NYSE acquires its first traded securities.[55][56]
In 1817, the constitution of the New York Stock and Exchange Board is adopted. It had also been established by the New York brokers as a formal organization.[57]
In 1824, the New-York Gas Light Company was listed on the NYSE. NowConsolidated Edison, it is the longest continually listed company on the Exchange.[58]
In 1863, the name changed to the New York Stock Exchange.
In 1923, Poor's Publishing introduced their "Composite Index", today referred to as theS&P 500, which tracked a small number of companies on the NYSE.[62]
In 1956, the DJIA closes above 500 for the first time on March 12.
In 1957, after Poor's Publishing merged with the Standard Statistics Bureau, the Standard & Poors composite index grew to track 500 companies on the NYSE, becoming known as the S&P 500.[62]
In 1966, NYSE begins a composite index of all listed common stocks. This is referred to as the "Common Stock Index" and is transmitted daily. The starting point of the index is 50. It is later renamed the NYSE Composite Index.[66]
In 1967,Muriel Siebert becomes the first female member of the New York Stock Exchange.[67]
In 1967, protesters led byAbbie Hoffman throw mostly fake dollar bills at traders from gallery, leading to the installation of bullet-proof glass.
In 1971, NYSE incorporated and recognized as Not-for-Profit organization.[66]
In 1971, theNASDAQ was founded and competes with the NYSE as the world's first electronic stock market.[68] To date, the NASDAQ is the second-largest exchange in the world by market capitalization, behind only the NYSE.[69]
In 1972, the DJIA closes above 1,000 for the first time on November 14.
In 1977, foreign brokers are first admitted to NYSE.
In 1987,Black Monday, October 19, sees the second-largest one-day DJIA percentage drop (22.6%, or 508 points) in history.
In 1987, membership in the NYSE reaches a record price of $1.5 million.
In 1989, on September 14, seven members ofACT-UP, The AIDS Coalition to Unleash Power, entered the NYSE and protested by chaining themselves to the balcony overlooking the trading floor and unfurling a banner, "SELL WELCOME", in reference to drug manufacturer Burroughs Wellcome. Following the protest,Burroughs Wellcome reduced the price ofAZT (a drug used by people living with HIV and AIDS) by over 30%.[70]
In 1997, on October 27, a sell-off in Asia's stock markets hurts the U.S. markets as well; DJIA sees the largest one-daypoint drop of 554 (or 7.18%) in history.[72]
In 1999, the DJIA exceeds 10,000 on March 29.
In 2000, the DJIA peaks at 11,722.98 on January 14; the first NYSE global index is launched under the ticker NYIID.Security after theSeptember 11 attacks
In 2001, trading in fractions (n⁄16) ends, replaced by decimals (increments of $0.01, seeDecimalization);September 11 attacks occur causing NYSE to close for four sessions.
In 2003,NYSE Composite Index relaunched and value set equal to 5,000 points.
In 2006, NYSE andArcaEx merge, creatingNYSE Arca and forming the publicly owned, for-profit NYSE Group, Inc.; in turn, NYSE Group merges withEuronext, creating the first trans-Atlantic stock exchange group; DJIA tops 12,000 on October 19.
In 2007, US PresidentGeorge W. Bush shows up unannounced to the floor about an hour and a half before aFederal Open Market Committee interest-rate decision on January 31;[73] NYSE announces its merger with theAmerican Stock Exchange; NYSE Composite closes above 10,000 on June 1;DJIA exceeds 14,000 on July 19 and closes at a peak of 14,164.53 on October 9.
In 2008, the DJIA loses more than 500 points on September 15 amid fears of bank failures, resulting in a permanent prohibition ofnaked short selling and a three-week temporary ban on allshort selling of financial stocks; in spite of this, record volatility continues for the next two months, culminating at5+1⁄2-year market lows.
In 2009, the second longest and currentbull market begins on March 9 after theDJIA closes at 6,547.05 reaching a 12-year low; DJIA returns to 10,015.86 on October 14.[64]
In 2013, the DJIA closes above 2007 highs on March 5; DJIA closes above 16,500 to end the year.
In 2014, the DJIA closes above 17,000 on July 3 and above 18,000 on December 23.
In 2015, the DJIA achieved an all-time high of 18,351.36 on May 19.[74]
In 2015, the DJIA dropped over 1,000 points to 15,370.33 soon after open on August 24, 2015, before bouncing back and closing at 15,795.72, a drop of over 669 points.
In 2016, the DJIA hits an all-time high of 18,873.6.
In 2017, the DJIA reaches 20,000 for the first time (on January 25).
In 2018, the DJIA reaches 25,000 for the first time (on January 4).[75] On February 5, the DJIA dropped 1,175 points, the largest point drop in history.[76]
In 2020, the NYSE temporarily transitioned to electronic trading due to theCOVID-19 pandemic.[77]
On February 15, 2011, NYSE andDeutsche Börse announced their merger to form a new company, as yet unnamed, whereinDeutsche Börse shareholders would have 60% ownership of the new entity, andNYSE Euronext shareholders would have 40%.
On February 1, 2012, theEuropean Commission blocked the merger of NYSE withDeutsche Börse, after commissionerJoaquín Almunia stated that the merger "would have led to a near-monopoly in European financial derivatives worldwide".[79] Instead,Deutsche Börse and NYSE would have to sell either theirEurex derivatives orLIFFE shares in order to not create a monopoly. On February 2, 2012, NYSE Euronext andDeutsche Börse agreed to scrap the merger.[80]
In December 2012, ICE proposed to buy NYSE Euronext in astock swap with a valuation of $8 billion.[9][81] NYSE Euronext shareholders would receive either $33.12 in cash, or $11.27 in cash and approximately a sixth of a share of ICE.Jeffrey Sprecher, the chairman and CEO of ICE, would retain those positions, but four members of the NYSE board of directors would be added to the ICE board.[9]
On January 24, 2023, a glitch in NYSE caused panic due to unintentional trade orders opened and closed in more than 250 securities.[82]
The NYSE's opening and closing bells mark the beginning and the end of each trading day. The opening bell is rung at 9:30 am ET to mark the start of the day's trading session. At 4 pm ET the closing bell is rung and trading for the day stops. There are bells located in each of the four main sections of the NYSE that all ring at the same time once a button is pressed.[83] There are three buttons that control the bells, located on the control panel behind the podium which overlooks the trading floor. The main bell, which is rung at the beginning and end of the trading day, is controlled by a green button. The second button, colored orange, activates a single-stroke bell that is used to signal a moment of silence. A third, red button controls a backup bell which is used in case the main bell fails to ring.[84]
The ringing of the bells is usually accompanied withapplause and is often done byVIPs andcelebrities (see pictures and the section "Notable bell-ringers").
The signal to start and stop trading was not always a bell; agavel was the original signal, which is still utilized alongside the bell. However, the gavel is frequently damaged. During the late 1800s, the NYSE decided to switch the gavel for a gong to signal the day's beginning and end. After the NYSE changed to its present location at 18 Broad Street in 1903, the gong was switched to the bell format that is currently being used. The bell itself was produced byBevin Brothers inEast Hampton, Connecticut, which is known colloquially as "Bell Town" for its history of bell foundries and metal toy manufacturing.
A common sight today is the highly publicized events in which a celebrity or executive from a corporation stands behind the NYSE podium and pushes the button that signals the bells to ring. Due to the amount of coverage that the opening/closing bells receive, many companies coordinate new product launches and other marketing-related events to start on the same day as when the company's representatives ring the bell. It was only in 1995 that the NYSE began having special guests ring the bells on a regular basis; prior to that, ringing the bells was usually the responsibility of the exchange's floor managers.[83]
^Hirst, Scott (January 1, 2017)."Frozen Charters".The Harvard Law School Program on Corporate Governance Discussion Paper.2016–01.Archived from the original on November 6, 2020. RetrievedNovember 1, 2020.
^Lynch, Sarah N (May 2014)."New York Stock Exchange to pay $4.5 million to settle SEC charges".Reuters. Washington.Archived from the original on August 19, 2014. RetrievedAugust 15, 2014.The New York Stock Exchange agreed on Thursday to pay $4.5 million to settle charges brought by U.S. securities regulators that the exchange flouted its own rules, marking the latest crackdown on violations of market structure rules.
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